Is technology a commodity or a critical resource in law firms?

This is the first in a new series of columns on the biggest mistakes
law firms make in their approach
to technology.

Technology in law firms has changed radically from the days of punch cards and lines of green text on black backgrounds. Much of the difference between how legal services were assembled and delivered 30 years ago and how they are now has been achieved through technological advances.

More recently, the rise of outsourcing and the growth of cloud computing has started to turn aspects of technology into commoditised services. This is a natural step not just for technology, or technology in the legal world, but for many industries. Technology becomes cheaper and more accessible year on year. So, this raises
the question of whether law firms should view technology as a commodity rather
than a resource.

Part of the answer to this revolves around what lawyers think will happen to their industry over the next few years. The intrusion of companies offering web-based and automated legal services has not been quite the big bang that some suspected,
but the continued growth of technology-driven service delivery in the legal world should at least give pause for thought.

Commoditisation conundrum

If you take the view that the legal world
will not change much over the coming years, you might also take the view that your technology costs should be minimised in order to help you to compete in a fairly fierce marketplace. The easiest way to do this is to attempt to commoditise the technology services you employ, allowing you to potentially drive down the costs associated with it. Technology can be roughly split into hardware and software costs. Hardware has long since been commoditised, but what about the
software side?

If one were to look at email systems,
for example, using commoditised cloud delivery for these makes perfect sense.
You get a standardised service from
a provider with more resources, better potential reliability and more or less infinite expandability. This allows you to buy services based on absolute numbers and at a reasonable cost. This can lead to more streamlined internal administration and a reduction in the amount of technology required to deliver the service.

Whilst that looks good, trying to view all your technology in the same way is likely to steer you into troubled waters. There are two broad reasons for that. The first is that not all firms behave and work in the same way, even on the same matters, so commoditising services linked to service delivery will not always provide the same results. The second is that the changes
that unfold in the marketplace for legal services, both buying and selling, will
force many firms to adopt different methods and thus different technologies to enable them to remain competitive. For me, it is the latter point that is the most interesting and links to how lawyers think the industry will change.

An enabling resource

Some legal services, like technical services, have become commoditised, and the key to leveraging these is to use technology
to do so. As more legal services become commoditised, technology will be the key to providing them. However the type of technology required is not, in my view,
a commodity in itself, but is likely to come in the form of a solution unique to the combination of law firm and client.

This may have people shaking their heads, but consider the services on offer for routine property transactions that are available online. The systems that underpin these are bespoke and built to process volumes of work at low margins. The bespoke nature of the system allows the provider to ensure it works at maximum efficiency, tailored exactly to their routines, and thus enabling them to trim margins.

This is a one-way process in that eventually most, if not all of these transactions, will be dealt with in this way. This kind of thinking should not be limited to low-margin work, as it is possible to process map, and thus emulate using technology, in a much broader range of legal services.

I am firmly convinced that law firms need to think of technology as an enabling resource first, and as a commoditised entity only where it is genuinely applicable. There is nothing wrong with taking the view that some of your firm's technology needs can be addressed as commoditised purchases, but it would be a mistake to think that technology has been reduced to the level
of commodity as a whole.

Technology will become ever-more important in enabling law firms to survive and compete. Rather than viewing technology as a box, law firms would do
well to start thinking a little outside of it.

Damian Blackburn is founder of Legal IT consultancy SLFtech (www.slftech.com) and was the IT director at a London law firm for 11 years